Orange County Supervisors and CalOptima Under FPPC Investigation

The state’s Fair Political Practices Commission confirmed Tuesday that the agency is investigating a majority of Orange County supervisors along with the CalOptima board of directors for potential conflict of interest violations of the Political Reform Act, based on the findings of two Orange County Grand Jury reports filed earlier this year alleging corruption at the highest levels of county government.

The revelation about the FPPC probe spilled out from an emotional public meeting Tuesday where all five county supervisors lashed out publicly at Orange County grand jurors, accusing them of using irresponsible headlines to cover badly focused probes that had now triggered state reviews.

Current, former and future grand jurors stepped to the public podium and steadfastly defending the integrity of their reports and volunteer efforts. District Attorney Tony Rackauckas also defended the efforts of grand jurors.

At one point during Tuesday’s meeting, Supervisor John Moorlach angrily stared grand jurors down as the board debated a motion brought by Supervisor Todd Spitzer to slash future panelists individual stipends from $50 a day down to $15. Last month, supervisors rejected a request from the grand jury for $20,000 in supplemental spending.

Orange County's Superior Court budgeted $209,000 for the grand jury this year, with $180,000 of that for salaries and benefits and $29,000 for services and supplies.

Ray Garcia, the grand jury foreman, defended the legitimacy of his panel's previous reports and told supervisors that the two final reports of this term would be released Wednesday.

Orange County grand jurors first provoked county supervisors in January when they issued their first report of the year, evocatively titled “CalOptima Burns While Majority of Supervisors Fiddle.”

That report questioned fundraising connections between hospital lobbyists, Supervisor Janet Nguyen and a county ordinance adoption that increased hospital influence on the governing board of CalOptima, the county’s managed health care plan that covers more than 400,000 poor and elderly residents.

In April, the panel followed with “A Call for Ethical Standards: Corruption in Orange County.” It gave a recap of corruption cases stretching back as far as the 1970s and urged the formation of an ethics commission, such as those in Los Angeles and San Diego.

Apparently the day after that report was released, the FPPC, political watchdog for the state, launched investigations into county supervisors — except Supervisor Todd Spitzer, who was not on the board during the ordinance change — along with many of the members that Nguyen moved onto the CalOptima board of directors.

“We opened the investigation based on the Orange County report,” said Gary Winuk, chief of the Enforcement Division for the FPPC late Tuesday.

“We are investigating violations of the Political Reform Act based on the findings of the grand jury,” Winuk said. “We were made aware of it through the district attorney’s office,” he added.

Not much is known beyond that, other than the probe is expected to take 18 to 24 months, Winuk said. The FPPC's subpoena authority has been used to interview witnesses, signaling that this is more than a routine audit of campaign accounts.

Supervisors likely began receiving letters from the FPPC in early May, about the time Spitzer suggested rejecting the grand jury supplemental funding request.

The probe also seems to have already triggered a change at CalOptima board meetings. In the past year, CalOptima board members rarely declared a conflict or abstained on issues.

But in May, there were two abstentions among the 10 board members and the June 6 meeting saw an unusual flurry of members abstaining and even leaving the room because of conflict concerns.

At one point when the board was discussing contracts with health networks, four of the 10 board members abstained. On another item that covered rate payments to providers, Nguyen abstained and two other board members — Samara Cardenas and Viet Van Dang — left the room.

Peter Agarwal abstained on a third issue involving teleworking and use of the CalOptima building.

The state constitution mandates that every county is required to impanel a grand jury each fiscal year, which is the reason they typically are sworn in during July. A grand jury typically comprises nearly two-dozen retirees.

Along with working with local prosecutors, the panel is a civilian watchdog of sorts required to consider issues of good governance, though with limited public funding. Public agencies are required to publicly respond to the jury's criticisms.

Elected officials often complain that the panel lacks diversity or recruitment standards and can often go off the mark because it rarely has the resources, expertise or staff to effectively analyze local government in real time.

“I’ve been very disappointed with the work product of the grand jury for years,” Moorlach said from the dais Tuesday. “I wish I would get a grand jury that got it and gave something of value.”

Moorlach was visibility irritated on Tuesday as he discussed the panel’s report on an ethics panel saying that “calling us corrupt” was “unbelievable.”

“Then I get a letter from the FPPC because our grand jury issued a report, therefore I must be doing something wrong and I'm under investigation.” added Moorlach. Ironically, Moorlach voted against the CalOptima ordinance change sought by Nguyen and the Hospital Association of Southern California.

“I love baseball, and I love to go to baseball games, and I love watching baseball," Moorlach said. "But, boy, when there’s an umpire that makes a bad call, it ruins the game. It demoralizes the players. It disturbs the fans.

"All I'm asking for is umpires that call balls and strikes right. They don't overembellish, they're not arrogant about who or what they are. And they should be respected. But respect is earned."

“I want so badly to just be excited about the grand jury and their work project," Moorlach said. "But inflammatory titles, shoddy workmanship — that isn’t fair to the grand jury, that isn’t fair to the Board of Supervisors, it isn’t fair to the employees of this county, it isn’t fair to the taxpayers."

Moorlach ultimately voted against many of the county’s responses to the grand jury report. Supervisors also delayed any action to reduce grand jury stipends, opting instead for a Spitzer proposal to have staff study the grand jury process in Orange County and report back periodically.

Despite the ultimate delay of action, consideration of the stipend issue allowed supervisors to publicly vent their grievances about grand jurors. Each supervisor criticized the panel from a different direction. They all insisted that their grievances and the stipend issue are not connected.

Board Chairman Shawn Nelson slammed the panel on the CalOptima report, saying he supported keeping the stipend at the state rate of $15 daily. “I’m not sent any extra budget for grand jury service,” Nelson said.

Nguyen also slammed the group for slamming her and for not granting her requests to be interviewed. She also repeated her allegation that the grand jury made factual mistakes in its report.

“I have never had to do a press conference to show you the evidence that was public record. … You were so wrong,” Nguyen said.

She also took issue with the lack of comment from the panel about her opposition to lucrative bonuses granted to top executives just as CalOptima was raising copays on vulnerable groups.

Spitzer took aim at the panel, saying it should consider a higher threshold for issuing reports. “I think there should be a probable cause requirement for issuing a civil report.”

He discussed how frustrated he was by the grand jury’s report on corruption in Orange County, saying about Foreman Garcia, “I wrote him two letters on that report, the corruption report. I wrote seven pages of notes.”

Nelson at one point admonished Spitzer to avoid talking publicly about grand jury proceedings, given their protected confidentiality status.

Bates later suggested that grand jurors needed more training and were being overly influenced by local blogs. She declined to identify the blogs by name.

“My discomfort with the reports was the matter in which the evidence was reviewed,” Bates said.

Supervisors were met with significant opposition in their bid to penalize grand jurors by cutting back stipends.

“If you do this, you’re un-American,” said Westminster resident Darryl Nolta. He added, however, that he too saw the holes in the grand jury's CalOptima report.

However, Nolta reminded supervisors, “it was a fundamentally important document, because it shook you up.”